The crypto boom of 2017 created a frenzy across the world for cryptocurrency. This resulted in property buyers and sellers looking for a way to get into this currency explosion. Cryptocurrency still pops up in new industries despite the fluctuating value and the critics who believe it will not last.
Even the real estate market has become involved with cryptocurrency, but you need to understand a bit more about this before you start buying and selling with cryptocurrency.
If you’re looking to invest in property via cryptocurrency, here’s everything you need to know.
#1 - Build Some Experience
Cryptocurrency is becoming a fad with high-dollar investors and it is popping up in more and more places, but it is not for the inexperienced. If you want to use this currency for buying or selling a property, you need to do some research.
You have to understand the market and how cryptocurrency works. It is recommended that you practice using the currency via verified exchanges such as Binance and Coinbase which allow you to buy and sell Ethereum and Bitcoin.
The buying and selling of these currencies is similar to normal stock trading. You can also become verified easily and link your bank account to the exchange.
When you start with this exchange, you will learn more about the digital currency before you move onto larger financial pools such as real estate.
#2 - Set The Standard
There are many challenges to buying and selling property with cryptocurrency.
The value of the currency fluctuates and this can be hard on the buyer. If you are going to buy or sell property with cryptocurrency, the price should be set in fiat as the standard. The contract you have will also need to specify how the crypto will be settled at the end of escrow.
An example of this would be a property that is priced at $1 million where the price of crypto is down at the close.
In this situation, you would have to make up the difference between the crypto value and the house value.
If the price of the cryptocurrency increases and the transfer has been made, the surplus amount has to be refunded. All of these details need to be spelt out in the contract as this will protect you in the long-term.
#3 - Partner With The Right People
In the future, it is likely that blockchain technology will be standard in all transactions we complete.
Until this time, anyone interested in dealing via blockchain will have some challenges to face.
The primary challenge of using cryptocurrency for real estate transactions is getting other people over the idea that this digital currency is fake money.
According to property financing specialists Maxiron Capital, there are a lot of sellers who do not want to take the time to deal with cryptocurrency yet. They explain “while the stigma is changing with the increasing popularity of cryptocurrency, it is still there. Anyone can learn how to use this technology and understand how it behaves regardless of the use.”
However, cryptocurrency is still in its infancy and to protect yourself, you need to find the right people to work with.
This includes the real estate agents you work with. They should be familiar and experienced in handling crypto transactions.
You also need to find a buyer or selling who is willing to create a BitPay account to get the money or a bank that will work as a third-party transfer.
#4 - Verify Your Transactions
‘If it’s too good to be true. It probably is’. This is applies to any cryptocurrency transactions.
Despite what many people believe, cryptocurrency systems can be hacked. As the space is new, it is fertile grounds for money laundering and dirty money which is hiding in cryptocurrency can be harder to trace.
To avoid any problems, you need to know your customer and know anti-money laundering practices. If you are contacted by an overseas buyer who claims they have a big stake in the next new token and want to buy property, you need to be careful.
The money management team from Concept Bookkeeping understands the importance of adhering to financial rules. They explain “it pays to be overly cautious during these transactions and you need to verify everything. Across the world, regulators are putting guidelines and new regulations in place to stop money laundering through cryptocurrency and you need to know what they are and use them.”
Cryptocurrency is a new and trendy way of buying and selling real estate. While there are a lot of benefits to using digital currency in real estate, you need to do some research to protect yourself.
This currency is new in the real estate industry and you need to understand what you are getting into.
Image source: https://www.pexels.com/photo/blue-and-gray-concrete-house-with-attic-during-twilight-186077/
This article was submitted by Sean Francis
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